Singapore's tough regulatory stance on cryptocurrencies has resulted in more than 100 companies failing to obtain a license to operate in the city-state. Since the Monetary Authority of Singapore (MAS) began regulating the sector, roughly 170 firms have applied for a license to offer digital payment token services, but the vast majority have either been turned down or withdrawn their applications, Nikkei Asia reported Monday.
MAS Targets Money Laundering and Terrorist Financing Risks
A spokesperson for MAS explained that cryptocurrencies could be abused for money laundering, terrorism financing, or proliferation financing due to the speed and cross-border nature of the transactions. To mitigate these risks, all digital payment token service providers in Singapore must comply with rigorous requirements, including customer due diligence, regular account reviews, and monitoring and reporting of suspicious transactions. Companies that were already operating before the licensing regime was introduced were granted temporary exemptions until their applications were processed. In July, Senior Minister Tharman Shanmugaratnam revealed that 90 companies were operating under such exemptions at the time.
Only Three Licensed Entities
As of now, only three companies appear on MAS's list of licensed entities: DBS Vickers Securities, a unit of Southeast Asia's largest bank DBS Group Holdings; digital payments startup FOMO Pay; and Australia's Independent Reserve. The head of capital markets at DBS and chair of the bank's crypto exchange stated in September, “We are growing very rapidly. Investors are gradually exploring cryptocurrencies and digital assets.” Despite MAS's ambition to turn Singapore into a global crypto hub, the regulator has maintained a cautious approach, prioritizing compliance and risk management over rapid expansion.
Binance Forced to Shut Down
Even the world's largest cryptocurrency exchange, Binance, could not escape the strict regime. In September 2021, MAS ordered Binance to stop providing crypto services to Singapore residents. The exchange later announced the closure of its Singapore platform. CEO Changpeng Zhao (CZ) attributed the shutdown to an 18% stake in Hg Exchange (HGX), a regulated securities exchange, but Bloomberg reported the real reason was that Binance could not meet the requirements for a crypto license. This case underscores how Singapore's regulatory framework leaves no room for non-compliance, even for industry giants.
Singapore's approach serves as a benchmark for other jurisdictions seeking to balance innovation with financial stability. As the MAS continues to process pending applications and refine its rules, the crypto industry will be watching closely for any changes in its enforcement posture.